Big changes to the Capital On Tap SME payment cards – no more Avios from paying tax to HMRC

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EDIT:  This article is now out of date.  Capital On Tap has relaunched with just one Avios card, Business Rewards, which is better than both of the cards described below.  Click here to read our review of Capital On Tap Business Rewards.  We still have a higher sign-up bonus for our readers!

Some important changes have been announced to the Capital On Tap Mastercard payment cards, which allow small businesses to indirectly earn Avios via a small business Mastercard.

The Capital On Tap cards have been very popular with HFP readers who own their own businesses.  As well as the obvious benefits of being able to indirectly earn Avios at a generous rate (0.5 Avios per £1 or 1 Avios per £1, depending on which card you took), there was another quirk.

Because the Capital On Tap cards are technically prepaid Mastercards, they can be used to pay HMRC without incurring any fees.  This has allowed SMEs to rack up tens or even hundreds of thousands of Avios by paying their VAT, tax and PAYE bills via Capital On Cap.

But then Brexit came along …..

My understanding is that the underlying issuer of the Capital On Tap cards is an EU institution.  This means that, given how the political situation currently looks, Capital On Tap would have serious issues continuing to operate beyond 31st October.

There is a simple solution to this problem.

From 1st September, new applicants for Capital On Tap cards will receive a standard corporate credit card.  The issuer will switch from Mastercard to Visa.

Existing cardholders will receive a new card in the post over the next few weeks, and the existing Mastercard products will stop working on 31st October.

Capital On Tap switching to Visa credit cards

As I understand it, all card benefits remain the same.  The sign up bonuses remain the same, the annual fee remains the same, the points you earn per £1 spent remain the same.

There is one change though.

The cards will no longer be treated as debit cards.  This means from 31st October they can no longer be used to pay HMRC for free, or to pay any other institution which only accepts debit cards.

(Techinically, you can still pay HMRC with Capital On Tap because HMRC accepts corporate credit cards.  However, you will be charged a credit card fee and this is too high to justify the Avios you will indirectly earn.)

The good news is that you should still be able to make your Quarter 3 VAT payment before your Mastercard is closed.  You could also make a prepayment towards your next Corporation Tax bill.  This should allow any HFP reader who has not yet triggered their sign-up bonus to generate enough qualifying spend.

Are the Capital On Tap cards still worth using?

For your existing card year, absolutely.

As you’ve paid your annual fee, you might as well keep on using the card for non-debit card transactions.  You won’t beat the indirect Avios earning rate of 0.5 Avios per £1 or 1 Avios per £1 from any other Visa or Mastercard.

When your card comes up for renewal, you will need to do the maths.  Look at how much credit card spend you can still put through it, work out how many Avios you will earn, look at the annual fee and decide if it makes sense.

For small businesses which make substantial volumes of Visa and Mastercard payments, the cards are still a great choice.  Remember that you can have up to 20 supplementary cards to give to your staff.

Capital On Tap mastercard earns Avios

A reminder:  this is how the Capital On Tap cards work

The rest of this article is a reminder of how the Capital On Tap cards work.   You will receive points worth 5,000 Avios or 20,000 Avios as a sign-up bonus.  There is an extra bonus for Head for Points if you use the promotional code below.

In theory, if you apply now, you should receive the Mastercard and be able to get two months of use from it before you are forced to use the new Visa corporate credit card.  This is obviously a bit messy, however, so I am not wholeheartedly recommending it UNLESS you know you can continue to use the card when it switches to a Visa credit.

What is Capital On Tap?

Capital On Tap is a niche payments group which offers two small business Mastercards which indirectly earn Avios – and we have negotiated a higher sign up bonus for our readers!

The Capital On Tap cards are aimed at SMEs and sole traders.  Whilst you may not have heard of Capital On Tap, it already has 50,000 customers for its existing ‘no rewards’ payment card.  These cards are their first move into the rewards market.

Capital On Tap is the answer for all of the people who have emailed me in search of a good travel rewards card for their business purchases.

You can find full details on their website here.  Read on first, however, to learn more about the additional bonus for HFP readers.

Capital On Tap offers two cards for SMEs which indirectly earn Avios

The company has launched two products.  One is aimed at lower spenders and one is aimed at those who can put substantial sums through the card.  In summary:

Card 1 – ‘Capital Club’

There is a sign-up bonus which converts to 5,000 Avios, with an on-going earnings rate which converts to 0.5 Avios per £1.  The annual fee is £99 (tax deductible).

Card 2 – ‘On Tap Club’

There is a sign-up bonus which converts to 20,000 Avios, with an on-going earnings rate which converts to 1 Avios per £1.  The annual fee is £249 (tax deductible).

Both sign-up bonuses require you to spend £5,000 within three months.  The bonus arrives at the end of your fourth billing period, irrespective of how quickly you spend the £5,000.

Another positive point is that Avios transfers from Capital On Tap are INSTANTANEOUS.  Log in to Capital On Tap, request a transfer of some or all of your available Capital On Tap points to Avios, log in to your British Airways Executive Club account and they will be there!  Capital On Tap is the only UK Avios partner to offer instantaneous transfers.

And an extra bonus for Head for Points readers!

Head for Points readers get an extra sign up bonus equivalent to 250 Avios with ‘Capital Club’ (total equivalent to 5,250 Avios) and 500 Avios with ‘On Tap Club’ (total equivalent to 20,500 Avios).

Interest rate information:  Your interest rate is based on your business profile and can be as low as 9.9% APR.  The standard interest rate for marketing purposes is 39.9% APR.

You can find full details of both cards – and apply – on their website here, but this does not reflect the switch to a Visa credit card from 1st September.  Read on first, however.

Earn Avios with On Tap Club Mastercard

Who can apply?

The Capital On Tap cards are aimed at sole traders as well as small businesses.  The company appears to be flexible in who they accept:

if you are a UK limited company or limited partnership with turnover of £24,000+ then you should be eligible

if you are a VAT registered sole trader then you should be eligible. 

if you are a sole trader under the VAT threshold but above £24,000 then applications are looked at on a case by case basis – if you have a functioning website and are clearly in business then I am told you should be eligible

Applicants must not have a CCJ against themselves or their business in the past 12 months.

The current Mastercard version is not a credit card.  They are structured as a prepaid Mastercard which is funded by Capital On Tap.  As far as I can see this doesn’t make any difference to your legal rights, as Section 75 protection does not apply to business credit cards.  In the event of any disputes over purchases, you request a Mastercard chargeback.

From 31st October, the Mastercard will stop working and you will need to use the replacement Visa corporate credit card.

How do the two Capital On Tap cards compare?

Here is a summary of the two Capital On Tap products.

Whilst I quoted the earning rates above in terms of Avios, you are actually awarded ‘Capital On Tap points’.  These can be converted into Avios or exchanged for cash.

Confusingly, the transfer rate between Capital On Tap points and Avios points differs between the two cards.

The £99 per year ‘Capital Club’ card offers:

10,000 Capital On Tap points for signing up and spending £5,000 within three months

1 Capital On Tap point per £1 spent

A 2:1 conversion rate into Avios so the sign-up bonus is worth 5,000 Avios and the on-going earning rate converts into 0.5 Avios per £1

15 free supplementary cards for your staff

No FX fees and no ATM fees 

500 bonus points (250 Avios) if you use code headforpoints when applying

The £249 ‘On Tap Club’ card offers:

20,000 Capital On Tap points for signing up and spending £5,000 within three months

1 Capital On Tap point per £1 spent

A 1:1 conversion rate into Avios so the sign-up bonus is worth 20,000 Avios and the on-going earning rate converts to 1 Avios per £1

20 free supplementary cards for your staff

No FX fees and no ATM fees 

500 bonus points (500 Avios) if you use code headforpoints when applying

Earn Avios with Capital on Tap

Do you really need a dedicated business Mastercard for your company?

Some sole traders, including myself, use a personal credit card for their business expenses.  A lot of self employed people – or their accountants – are not happy doing this, however, and it is clearly not sensible to give personal credit cards to your staff.  You need a dedicated business payment card in these circumstances.

Until now, if you wanted to earn rewards from a small business payment card you were reliant on American Express Gold Business or American Express Platinum Business.  These are good products but obviously have issues over Amex acceptance, especially with small suppliers.

The Capital On Tap Mastercards are small business cards that can be used everywhere that Mastercard is accepted.

Which of the two Capital On Tap cards should I get?

You need to look at the maths based on what you spend, including how much you spend in foreign currencies (the card has no FX fees).

The £99 or £249 annual fee is a tax deductible expense so the net cost to you will be lower.  In Year 1 you are getting a sign-up bonus which converts into 5,000 Avios (£99 card) or 20,000 Avios (£249 card) respectively.

Using the special headforpoints promo code increases your bonus by 500 Capital On Tap points so the sign-up bonus converts into 5,250 Avios or 20,500 Avios respectively.

Day to day you are collecting the equivalent of 0.5 Avios per £1 spent (£99 card) or 1 Avios per £1 spent (£249 card).  If you and your staff have a high level of business expenditure then this could work out very nicely for you.  Remember that you can have 15-20 free supplementary cards.

For Year 1, I think there is a very strong case for getting the £249 ‘On Tap Club’ card.  The sign-up bonus converts to 20,000 Avios – which offsets most of the after-tax fee – and then you are picking up the equivalent of a lucrative 1 Avios per £1 after that.

For Year 2+, you need to look at what you are spending.  If you value an Avios point at 1p, the crossover point at which the £249 ‘On Tap Club’ card earning the equivalent of 1 Avios per £1 is the best choice is roughly £30,000.  If your annual spend is under £30,000 you may want to trade down to the £99 ‘Capital Club’ card and earn the equivalent of 0.5 Avios per £1.

But don’t forget …..

Capital On Tap points can be converted into cashback as well as Avios.  You can choose to take 1p of cash instead of 1 Avios.

If you don’t value Avios at more than 1p (and in most scenarios you can get more than 1p for them as this article shows) then take your Capital On Tap points as cashback instead.

You should also talk to your accountant about the tax consequences of taking cashback instead of Avios.

Remember to use our Capital On Tap promo code when you apply!

If you do decide to apply now before the card is switched to the new Visa credit card, you can find out more and apply on their website here.

Remember that the Mastercard debit card will only be valid until 31st October and at that point you will need to use the new Visa corporate credit card version which you will be sent nearer the time.

Don’t forget to add promo code headforpoints to receive the extra 500 points as a sign-up bonus.

Disclaimer: Head for Points is a journalistic website. Nothing here should be construed as financial advice, and it is your own responsibility to ensure that any product is right for your circumstances. Recommendations are based primarily on the ability to earn miles and points and do not consider interest rates, service levels or any impact on your credit history. By recommending credit cards on this site, I am – technically – acting as a credit broker. Robert Burgess, trading as Head for Points, is regulated and authorised by the Financial Conduct Authority to act as a credit broker.

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  1. Look forward to sharing this niche negative impact of Brexit when someone tells me that there are none 😉

    • Czechoslovakia says:

      “I smell something fishy. And I’m not talking about the contents of Baldrick’s Apple Crumble…” When I looked up the card issuer behind the CoT card, it was somewhere in Mexico, and security came through Iceland. I assumed this allowed CoT earn a chunk of the full 3% interchange rate, and providing the income stream for the avios. I don’t see, if that is correct, how it is actually related to Brexit. What I did read, a few months back, was that MasterCard was voluntarily reducing the interchange rate on this type of prepaid card, globally, and significantly, to try to increase it’s acceptance. If that’s correct, it would make sense as to why the change to the CoT card. I can’t recall the date MasterCard was reducing this, but it wouldn’t surprise me if it were coincidentally the end of October also. Maybe I’m completely wrong, don’t take this as gospel, but I have been assuming the end of HMRC payments with CoT for months, and accordingly asked my company accountant to prepare the company accounts early this year!

    • Well you have persuaded me that we should remain!.

  2. Hmmm..

    Article implies as you’ve already paid up for the year then you may as well retain card but if the change does negatively impact its usefulness (I don’t have one) then I would suggests theres a strong case for a pro rated refund.

    This was not entirely unpredictable after all – yet Curve appear not to be making a similar change (not yet at least but based on prior experience I fully expect the card to just stop working one day)

  3. Spurs Debs says:

    Must be Brexit fault. When did Jamie Oliver join HFP?

    • The Savage Squirrel says:

      This is what CoT themselves have said. Rob is just reporting the company statement, so any criticism of HfP for this view is misguided.

  4. Brexit my arse.

    Another Fintech losing money hand over fist for a solution looking for a problem.

    Doubt there will be a clamour for an juicy IPO after funding circle debacle.

    • Roberto says:

      My thoughts too.. Brexit is an easy excuse and I can see others using it too in the coming months.

      I have this card and got my 20k bonus yesterday only about a month and a half in and well before the end of the 4th bill as outlined- I presume that this is related to the changes.

      I have a lumpy bill to pay before the deadline which was the predominant reason for getting the card and will cancel before next years renewal based on todays news.

      • Lady London says:

        Ah. Seems like others are thinking same as me, then. i.e. this excuse for dropping the debit side of the card – is a load of hogwash.

        Perhaps “it’s because of Brexit” is going to become the new “we need to because of security” excuse?

        • Lady London says:

          PS As the reason for dropping the debit side of the card is clearly hogwash I’d suggest people contact Capital on Tap on 1st November or notify that you cant accept the new conditions of the card as from 1st November and will therefore be cancelling the card as from 1st November and you expect a pro rate refund for fees.

          I think you have a very good chance of being on solid ground to do that and it would certainly send them the right message..

          • See my comments below in reply to another one of your comments. There is a Brexit related impact if it is true that the Mexico based issuer is operating through an Iceland based entity. No more passporting rights for EU and UK institutions to operate across the forthcoming border change.

          • In response to Dev below then, the press release should not have said because of Brexit, but ‘..because the U.K. has no plans to return to being a member of the E.E.A. our Mexico/Iceland fiddle will no longer work’.

  5. Well thats my 100k avios per month up the swanny

  6. Mr(s) Entitled says:

    The solution may be simple but the explanation is lacking. Why does switching from Mastercard to Visa solve their supposed Brexit related problems?

  7. Iv only had an Amex but recently got myself IHG premium card, I also got myself the curve card to try! I knew Amex wasn’t accept by curve but I didn’t realise IHG card was also not compatible with curve so now I have 3 cards that can’t be connected to each other!!

    • IHG and curve work fine together

    • Incorrect, IHG Premium certainly is compatible with Curve and I have the Spire Elite status (‘thank you’, HMRC…) to prove it. What are you finding to be the problem?

    • TGLoyalty says:

      I’ve been using mine fine together for the best part of 3 years now.

      User error? Trying to put through limited transactions I.e. anything that’s cash like is restricted to £700 a week and £300 max. Usually 300 200 200 over a week period in my experience.

      • Possibly user error I will call them, when I load my long card number it shows on curve as I’m trying to add a Marriott credit card even though it is a IHG so maybe that’s the issue. If it works for everybody else that’s a positive at least I know I will get it working. Thanks people.

        • Mary Berry says:

          This is just the preset card image. You can change this to an IHG card image (and a range of others) in the individual card settings.

          The card works fine whatever image you choose.

      • Mine works fine. My partner’s card [own card account, not additional] ]however can not be registered. So maybe there is something in the system there. On another note, if I can get 2x more ‘friends’ then Curve are going to give me the £9.99 package for free for life apparently. quite frankly, I don’t trust a single piece of nonsense Curve spouts out any more.

    • Peter K says:

      Sounds like you are trying to make high value cash like transactions then…

    • Rooster says:

      Sometimes creation flag Curve payment as fraudulent for some reason it happens with small payments and refunds, I had a card reissued because of it and was very annoying. Ask for a replacement card and try again if you avoid refund and the time machine in Curve then you maybe ok

  8. I thought I was on to a winner when I won 4 tickets to the euro 2020 finals in the ballot. 3k they cost me but it was a great opportunity to grab 4000 Amex points for a £2900 spend! I cannot believe uefa don’t accept Amex my barber and local coffee shop take Amex! What a wasted opportunity!!

    • This happened to me so I used my bank card despite the website forcing me to pay in £s rather than euros my bank then hit me with a £50 non £ transaction fee because it claims the tickets were priced in euros when even though it makes clear you must pay in your own currency and forces you to do so.

      • The website is bad in that respect as it tells you the price in € then converts it into £ but still charges in €.

        I’ve made two purchases via Curve for Euro 2020 tickets and it’s went through in € both times and cost more than the website says in £

        • Sussex Bantam says:

          Can I borrow the violin ? I got nothing in the initial allocation and then spent all yesterday afternoon sitting in a virtual queue to get nothing in the returns process too…

      • Lady London says:

        Time to use something like Revolut then?

    • Spurs Debs says:

      Obviously Amex didn’t put enough in the “envelope” for that lot of shysters.

  9. Ombudsman will be handling a few extra cases this year, as it’s unlikely the card issuer will admit any fault/uphold any complaints themselves from disgruntled customers who only took the card for HMRC payments…

    I’m not a customer, but if I were I’d be seeking a cotexit.

    • Lady London says:

      It’s changed the fundamental nature of the services provided by the card and it;s no a niche feature it’s a core feature of the card.

      Normally it costs a company about £600 every time someone complains to the Ombudsman as well due to the Ombudsman’s fee to the company for handling each complaint. (Some companies apparently have a lot of Ombudsman complaints and manage to negotiate a “season ticket” type rate.)

  10. Billy Nicholson says:

    Can’t we just add the new Visa card to Curve and pay HMRC like that?

    • TGLoyalty says:

      Yep. Issue for some will be the £50k annual limit (£100k for some users)

      • Billy Nicholson says:

        Yes of course the limit. Frustrating for most, but I should be ok as I’ve already paid my Corp tax on COT

        • Billy Nicholson says:

          Scrap that, as I have the free card I can’t efeb pay my VAT bill curve has a £2000 daily purchase limit and HMRC insists on one single payment

          • Lady London says:

            Someone said elsewhere on here a while back that actually HMRC don’t insist on one single payment, but on only one single card that can actually be used for more than one payment.

    • That would work, but then you’d be better off using a Virgin Reward + (better earning rate), HSBC PWE (same rate but not restricted to avios) or IHG premium (lower rate but easy Spire, if you care) for your precious Curve annual allowance.

  11. David J says:

    I don’t have a CoT card but the article has raised a question – you say “Because the Capital On Tap cards are technically prepaid Mastercards, they can be used to pay HMRC without incurring any fees”; I have the Miles & More Mastercard which is also a pre-paid Mastercard so can I use this to pay HMRC?

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